At first glance, this doesn’t seem to have a whole lot to do with ebooks, but on a closer read, it’s really interesting to observe some of the parallels between Toys R Us’s situation and things that have been happening to bookstores over the last few years.

For example, there’s this paragraph:

A Toys R Us bankruptcy does not necessarily mean the company will close stores, and retailers such as Macy’s have operated through bankruptcy before. For the major toy companies, there may be vested interest in Toys R Us successfully coming out the other end of a debt restructuring.

When Borders, the second largest bookstore chain in the US, went bankrupt in 2011, that shocking event should have set alarm bells ringing in CEO offices of every publisher.

The second-largest bricks-and-mortar customer for every major US publisher had just imploded. Perhaps it was time for some new thinking? Would the future be a lot different than the past? What a silly thought.

Borders would have been happy to sell its assets to virtually any willing purchaser, but smart money was not interested. Neither was dumb money and about 650 retail bookstores in the US just disappeared.

And in a comment, Nate adds that Borders “died because its creditors (the major publishers) would not let it be saved.” You would have thought publishers would have had a “vested interest” in preventing the second-biggest bookstore chain in the US go under, wouldn’t you? Are the toy companies going to be smarter than the publishers?

The CNBC piece goes on to say:

Beyond offering the toy companies a place to sell their products, the retailer often does so without marking their prices down as much as big box retailers like Target. The retailer’s vast space and toy-centered raison d’etre give toy companies a unique venue to sell their product.

You could replace “toy companies” with “publishers” and “toy-centered” with “book-centered” and you’d perfectly describe the role of bookstore chains like Borders—and, for that matter, Barnes & Noble. The bookstores don’t mark their book prices down as much as big-box stores, but they have a much bigger selection. It’s that selection of books that people can look at and browse and flip through in person that publishers and their advocates bemoan losing as sales migrate more and more toward on-line. They’re also “the only true showroom the industry has,” if you’re talking about the publishing industry. Of course, Amazon can outdo both the toy stores and bookstores on both price and selection.

Another odd toys-to-books connection is that, elsewhere, the CNBC article mentions that another problem toy stores face is “children who increasingly prefer tablets to toys.” But the article never goes on to elaborate on that point, even though it entitled the whole article section “Tablets over toys.” (If you look elsewhere, though, you can find articles about research showing that kids are playing with tablets more than traditional toys—even as they seem to prefer to read books on paper rather than the screen.) Certainly tablets like the Fire 7 are getting cheap enough that they cost less than some children’s toys, and they do have a broader range of uses than an articulated chunk of plastic.

The piece does touch directly on Amazon, though, at the very end—when it discusses how toy companies could wean themselves away from dependence on Toys’R’Us by turning to alternative sales channels.

One of the quickest growing channels: Amazon. The e-retailer is the “beneficiary of [the] millennial parent,” said [Jefferies analyst Stephanie] Wissink, as Amazon is “quickly becoming the No. 2 toy retailer behind Wal-Mart.”

You would think, from the way the publishers allowed Borders to die and don’t seem to be doing a lot to try to save Barnes & Noble, that they should be trying to wean themselves over to alternate channels than big bookstore chains. The problem is, they have that love-hate relationship with Amazon, the mega-store that sells more than half of their books for them at the moment. The last thing they would want to do is give Jeff Bezos even more power.

The odd thing is that the CNBC article never directly touches on the way that Amazon’s ascendancy to “the No. 2 toy retailer” position might also be responsible for some of the financial troubles Toys R Us finds itself in. This stands in stark contrast to Barnes & Noble’s situation—no article about Barnes & Noble’s struggles can seem to resist poking in a mention of how Amazon is cleaning B&N’s clock. And if Amazon is indeed “quickly becoming the No. 2 toy retailer behind Wal-Mart,” it must surely be renovating Toys R Us’s chronometer as well. But the closest this piece comes seems to be the cryptic mention of how kids are coming to prefer tablets to toys. Otherwise, it places all the blame on “cheaper off-shore imports” and “margin-squeezing big box retailers.”

It’s also funny to consider that I almost never read scare pieces about how badly Toys R Us’s failure could affect the toy industry, whereas I run across pieces discussing how badly B&N’s failure could hurt the publishing industry almost every day. And yet, I don’t know of very many other toy store chains on a par with Toys R Us. Shouldn’t it be a major blow to the industry if they go away? Why isn’t the industry belly-aching and bemoaning all this the way the big publishers are? Or conspiring to force Amazon to sell its toys at higher prices to save the brick and mortar stores?

But then, toys don’t have all the cultural baggage that books do, so I suppose it’s not surprising they get treated differently. It is surprising I don’t see more places remarking on these obvious parallels, though.

I wonder how long it will be before Barnes & Noble has to declare bankruptcy?

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Published by Chris Meadows

TeleRead Editor and Senior Writer Chris Meadows has been writing for TeleRead--except for a brief interruption--since 2006. Son of two librarians, he has worked on a third-party help line for Best Buy and holds degrees in computer science and communications. He clearly personifies TeleRead's motto: "For geeks who love books--and book-lovers who love gadgets." Chris lives in Indianapolis and is active in the gamer community.
View all posts by Chris Meadows

The same fundamental convenience factor applies. If there is a toy you know you want to buy, say, mastermind, or some lego box, or monopoly, or whatever, what are you going to do – drive through mall traffic to a toysRus which may or may not have it and then slog through a sullen checkout line – or just one-click order it. Like bookstores they offer a browsing experience (which is not to be missed at Christmas) but for pre-selected purchases Amazon just works better, and that takes a big chunk out of their customer base, as it does with B&N.

It’s niggling, but I’d call that Toysrus/B&N connection “obvious” rather than “odd.” Both are speciality stores threatened by Amazon, the “everything store.” Both are physical stores threatened by online.

Of course, I can also remember when toy stores and bookstores were rare outside big cities. For toys, parents shopped via a Sears catalog—and yes, Sears is now spiraling toward bankruptcy too. For books, they often joined book clubs that’d mail them the book-of-the-month. Book clubs also seem to have disappeared.

Those who champion “creative destruction” and crow about how convenient Amazon is are forgetting some critical factors. Replacing the dozens of auto makers of the early twentieth century with just the Big Three was not a disaster because there were still three to compete. If Amazon destroys local retail, who is there competing with it in online retail? There are other online stores, but they’re a tiny fraction of its size and typically linked to physical stores.

Local employment is another factor. Amazon’s well-paying white-collar jobs are in just one city and even if that expands to two (so Bezos can better extract tax concessions), it is still just two cities out of hundreds. And if those local store clerk jobs disappear, they’re not really being replaced by Amazon’s warehouses. My state has thousands of little retail stores. It doesn’t have a single Amazon warehouse. It might not be an exaggeration to say that Amazon doesn’t employ a single person in my state. Amazon is sucking money out of it at the same time it is driving up housing costs in Seattle.

And yes, there are still a lot of local jobs delivering packages from Amazon. But have you notice that if Heart-of-Stone Bezos has his way, those jobs will go away? The guy thinks he cam replace them with flying drones. That makes no sense. Is that drone going to drop packages in people’s front yard? It’d have trouble managing to get on a lot of porches, including mine. But he might get away with a computer-driven truck, while paying someone a measly minimum wage to trot packages to the door.

Both chain book and toy retail also seem to have executives too clueless to know how to fight back. I am too old for toys, but I’ve got B&N tablet for instance, that the company abandoned. I can’t get software for it from them anymore and, the company couldn’t even be bothered to make the last upgrade one that let me buy apps from someone else. I just got dumped. Having been dumped, I won’t forget that.

In comparison, my now-ancient Kindle 3 ereader still gets occasional, although clumsy, updates. And my 5-year-old iPhone 5 just dropped off the iOS upgrade cycle, although I can still get apps for it. What you don’t support, you’re likely to find yourself unable to sell. Amazon and Apple understand that. B&N executives do not. They still live in the world of printed books that don’t need updates.